chapter 1 Reaching for a new Deal: ambitious governance, economic Meltdown, and Polarized Politics

Theda Skocpol and Lawrence R. Jacobs

“The New New Deal—What Barack Obama can learn from F.D.R.—and what Democrats need to do” was the feature story in the Time magazine of November 24, 2008, which hit the newsstands soon after the historic 2008 elections. The striking cover portrayed a grinning Obama wearing a fe- dora and riding in an open car, a cigarette in a long silver holder jutting from his lips. The image nicely suggested that the newly elected president might be able to propel a shift in U.S. governance and politics comparable to that of Franklin Delano Roosevelt’s first New Deal in the 1930s. Put another way, it seemed that the Obama administration, working with Democrats in control of both chambers of Congress, might be able to fash- ion public programs and tax measures to mitigate and reverse trends to- ward greater social inequality that have marked American society in re- cent decades—and to do so in a way that could build majority support and electoral momentum for the future (Beinart 2008). Not just Time mag- azine writers, but many pundits reacting to the 2008 election as well, spec- ulated that Obama’s presidency could be pivotal in the same way as FDR and Ronald Reagan before him, shifting the role of government in U.S. life. By two years after Obama took the oath of office, the jaunty image was long gone—even though the record of accomplishments was impressive. President Obama and the Democrats of the 111th Congress fashioned 1 2 Reaching for a new Deal landmark legislation during 2009 and 2010—comprehensive health care reform, revamped higher educational loans, and regulation of Wall Street financial practices vital to the health of the U.S. and world economy. Mo- rale and degrees of effectiveness were restored or established in many parts of federal administration that had languished or abandoned key missions, and the Obama administration made assiduous use of cabinet powers to spur school reforms, improve health and safety enforcement, enforce immigration laws, and tackle environmental threats. What is more, economists of various persuasions and the nonpartisan Congressional Budget Office agree that the fledgling Obama administration and congres- sional majorities took the basic steps necessary in 2009 to cut short a finan- cial crisis, prevent a sudden disappearance of the U.S. auto industry, and forestall overall economic collapse into a second Great Depression. After a few months, America’s beleaguered economy turned from nearly unprec- edented contraction to growth (Geithner 2010). All this happened as the White House also pulled the nation back from the protracted bloodletting in Iraq, redefined and intensified the previ- ously faltering war in Afghanistan, and reengaged global negotiations over environmental, security, and financial issues. Few new presidents have been greeted with so many crises at once, and few have tackled so much so fast, whatever missed opportunities, political controversies, and maladroit steps there have been along the way. The Obama administration made progress during 2009 and 2010 despite a solid wall of opposition from congressional Republicans, whose obstruction of remedial steps to prevent the collapse of the financial system and national economy may be without parallel in a juncture of true national emergency. Years from now, when current political passions calm and historians look back, the first two years of the Obama presidency and the 111th Congress are bound to stand out as one of the most active and consequential junctures in modern U.S. history, a moment when, amidst popular dismay, partisan polariza- tion, and clashing movements, the White House and Congress tackled ex- traordinary challenges, averted catastrophe, and put policies in place to foster a healthier, better educated, and more equal American society. But as of 2011, with a brash, Republican-led House of Representatives driving much of the agenda in Washington, D.C., in the wake of massive November 2010 electoral losses for Democrats, Obama’s presidency has been declared a failure by opponents and a disappointment by some ini- tial supporters (for a sample of ongoing debates, see Alterman 2010; Hirsh 2010; Judis 2010a, 2010b; Klein 2010; Kuttner 2010; Krauthammer 2010; Krugman 2010a). According to official reports, the U.S. economy pulled out of recession during 2010, but growth remained sluggish and the cre- Reaching for a new Deal 3 ation of jobs, especially in the private sector, did not keep up with the needs of a growing population or counter the desperation of millions who lost employment or hours of work in the Great Recession (Krugman 2010b). The crisis of 2008 and 2009 in the United States was triggered by financial shenanigans and a real-estate bubble, so even as overall growth stumbles back to life, retirees and near-retirees have seen lifetime savings shrink, and millions of American families are saddled with mortgaged homes they cannot sell for enough to cover what they owe. In many parts of the country, communities are blighted by depressed real estate markets and dotted with abandoned shopping malls and storefronts. As tax reve- nues have fallen, state and local governments struggle to maintain ser- vices needed more than ever and have boosted unemployment by laying off state employees. Overall, state cutbacks have counteracted much of the boost from federal stimulus spending in 2009 and 2010. On the federal level, as stimulus spending wound down, Obama struck a postelection deal with congressional Republicans in December 2010 to temporarily sustain unemployment benefits and middle-class tax breaks in exchange for extending tax cuts for the affluent for two more years, even though experts rate such cuts for the affluent as one of the least effective ways to boost economic growth. The story is also one of stubbornly divergent economic fortunes (Reich 2010). As overall economic growth returned in 2010, things seemed to have recovered in the upper-middle-class enclaves where managers and professionals live and work, but the economic doldrums persisted in most other urban, suburban, and rural areas—places where, no matter how much prices are reduced, most consumers cannot afford to buy enough to jumpstart robust growth and new hiring. Going into the Great Recession, the United States had developed glaring gaps of income and wealth, di- vergences that reached the highest point since the late 1920s. Long gone is the postwar U.S. economy in which a rising tide lifted all boats. Since the late 1970s, the U.S. rich, super-rich, and super-super-rich have seen their wealth and incomes soar, but the upper middle class has experienced a modest rise in fortunes, and everyone else has treaded water—in what Jacob Hacker and Paul Pierson (2010, chap. 1) aptly call a winner-take-all economy. Americans of modest means tried to keep up by taking on debt with credit cards and second mortgages, which fed the financial melt- down in 2008 and has made it hard for families to resume consumer pur- chases since then. The struggling recovery has intensified the unequal for- tunes of Americans, as the rich and the upper middle class regain footing first and other Americans slip further behind and struggle to afford the basics of life. The nonpartisan U.S. Census Bureau reported the highest 4 Reaching for a new Deal number of Americans and children living in poverty since it began collect- ing these data half a century ago, and community groups placed the need for food assistance at a quarter-century peak. By any standard, massive suffering and uncertainty continue for work- ers and communities facing a lack of jobs, home foreclosures, and lost wealth in pensions and home equity; and entire cohorts of young adults are finding it nearly impossible to launch stable careers and build families. Yet since the initial recovery steps taken in early 2009, the Obama admin- istration has proved unable to persuade Congress to do much more to save or create new jobs, especially not through additional federal spend- ing (Montgomery and Irwin 2010). Some would argue that it has not even tried very hard to get Congress to accept such steps. For Americans pri- marily worried about jobs, the major reforms Obama and congressional Democrats delivered during 2009 and 2010—reconfiguring the health in- surance system, regulating Wall Street—have not seemed directly relevant to their daily lives. The political tsunami in November 2010 resulted, in part, from deep divisions among Americans about the realities and prospects of the econ- omy, with many voters questioning the effectiveness of federal govern- ment efforts to cope with economic stagnation, immigration dilemmas, and environmental threats (Silverleib 2010). Jobs were the top concern, but many people also worried about taxes and looming federal debts, because even before Obama arrived at the White House, unpaid wars and upward- tilted tax cuts had run up considerable federal red ink, and the federal government had spent still more to avert another Great Depression. Amer- icans were upset to see significant new spending and federal indebtedness without tangible robust recovery for ordinary workers and families. Vot- ers experiencing the bad could not readily grasp that things could have been far worse. Because Democrats were the incumbent party, they bore the brunt of public doubts: in the U.S. House of Representatives they lost the majority and gave up a post–World War II record sixty-three seats; in the Senate they were reduced to fifty-three seats, well short of the sixty- vote majority necessary to overcome a filibuster; and in governorships and state legislatures they also saw major losses, especially in the Mid- west. Whether or not most Americans had confidence that Republicans would make things better—and polls in late 2010 and early 2011 suggested that they did not have it—the voters expressed their dismay about gov- ernment ineffectiveness by voting against the incumbent party. At least, that was the case for voters who actually appeared at the polls. As is typical in a midterm election, only about 40 percent of those eligible actually voted, and they were skewed toward older, richer, whiter voters—the very groups that had been least supportive of Obama in the Reaching for a new Deal 5

2008 election. Political science models tell us that when the presidency and both chambers of Congress are held by one party, the next election almost always brings a shift back toward the opposition under any economic and governing scenario. Republicans made outsized gains in the 2010 state and federal elections because of a double whammy: the natural swing against the in-party, exacerbated by voter anger at the continuing eco- nomic downturn and polarization and ineffectiveness in Washington.

Making SenSe of The obaMa PReSiDencY So faR Postmortems on Obama’s presidency did not wait for the official results of the November 2010 election. Even before the votes were in, many ana- lysts—both partisans and ostensibly neutral pundits—declared that Re- publican gains amounted to a repudiation of President Obama and his ideas for using federal government powers to expand economic opportu- nity and security. Sweeping aside the complex set of factors at work in this election, many have equated Republican gains with an embrace of small- government, low-tax prescriptions. Just as pundits had mistakenly de- clared Obama the second coming of Franklin Delano Roosevelt in the fall of 2008, they began portraying him as a less successful version of Jimmy Carter. Democrats once touted as the inevitable new majority in a demo- graphically changing nation, where youth and minorities seemed to own the future, were dismissed after November 2010 as has-beens in cable news segments dominated by crowing Republican “analysts.” Extreme and simplified interpretive swings keep producers swirling in a 24/7 media world, but they are misleading. They don’t prepare us for what may happen from election to election, especially because the ranks of voters will again expand in 2012 to include more of the young, non- white, and less well-to-do citizens who more typically show up in presi- dential contests. Even less do extreme and simplified interpretations tell us about actual governmental accomplishments and what citizens think about them—or may come to think about them over time. The 2010 elec- tion principally hinged on frustration with high unemployment and the ongoing adverse consequences of policy choices and a financial crisis not of Obama’s making. Contrary to claims that voters are repudiating the use of government for reformist purposes, polls repeatedly show that voters want concrete measures to help the economy, create jobs, improve health care, and expand access to education, as well as measures to tighten regu- lation of the financial sector. The 2010 election was not a referendum on so-called government take- overs—for the obvious reason that none were attempted in the early 6 Reaching for a new Deal

Obama presidency. As this volume explains, in one major policy area after another, the Obama administration accommodated established stakehold- ers and sought significant but circumscribed reforms to surmount obsta- cles in the legislative process and avoid unified opposition from busi- nesses and regional interests. The Obama White House never acceded to calls from leftists to break up the banks or bypass private health insurers. Legislative blueprints that might have reworked the energy economy or empowered labor unions were stymied in Congress and never pushed very hard by the White House. This does not mean that Obama and the Democrats did nothing or entirely deferred to corporate interests; on the contrary, significant steps have been taken to help the majority of Ameri- cans. But the legislative and administrative reforms that moved forward did so with many accommodations to market realities, fashioned by Obama officials and advocates of business interests within both parties in Congress. Our project offers the first rigorous investigation of the first two years of the Obama presidency and draws an interim balance sheet—one that shows remarkable policy accomplishments in key realms, tempered by legislative defeats and gridlock, intense political opposition, and height- ened public anxiety during a persistent national economic crisis. We do not arrive at interpretations breathlessly at the last minute. From the fall of 2008 through the fall of 2010, as the early Obama era took shape and the president and others set agendas and pushed for redirected policies, we tracked happenings in and beyond Washington, D.C. We have tracked data, collected key documents, interviewed key players, and analyzed public opinion, interest group maneuvers, popular outbursts, and con- gressional votes. We have developed big-picture assessments, and offer real-time analysis and predictions based on in-depth understanding of what has transpired at a dramatic juncture in U.S. politics. Pointed analy- ses of the policy successes, partial successes, backfired efforts, and out- right shortfalls of Obama’s reach for another New Deal offer a remarkable window into U.S. politics—and give us telling insights into where clash- ing partisans, maneuvering interest groups, and ambitious politicians may take America next. What happens when a youthful president, backed by substantial but not overwhelming congressional majorities, takes office during a gather- ing economic storm and tries to turn the titanic U.S. ship of state amidst the choppy seas of partisan clamor and nonstop interest group lobbying? How much change do existing political institutions allow—and why more in some policy areas than others? Can ambitious presidential initiatives make headway in an acute economic crisis that arouses widespread pop- ular anxieties and shifts calculations for businesses large and small? Reaching for a new Deal 7

Even with large congressional majorities from the same party, what can a change-oriented president do to help Americans who are not rich and well connected in a political system that favors big contributors and insiders? Which presidential attempts to ask more from the rich to create budgetary room for policies on behalf of the majority make headway; and which are partially or entirely thwarted? Of course, answering the sorts of big questions that motivate this proj- ect, not to mention attempting to draw an interim bottom line after the first two years of a change-oriented presidency, are in some ways prema- ture endeavors. Only the fullness of time and the longer perspective of history will allow final answers to the questions we pose. But, in another sense, grappling with these big questions is a much better way to probe Obama’s ambitious presidency and its political consequences than truck- ing in simpleminded oppositions of success versus failure or more gov- ernment versus rejection of government. Grappling with these big ques- tions is also a better way to analyze the early Obama era than highly spe- cialized social science that latches on to one narrow strand of a complex real-world dynamic. The contributors to this collection are all scholars who know how to synthesize findings about various aspects of politics that other scholars treat in isolation. We track and consider the intersec- tions of presidential and bureaucratic initiatives, congressional coalition- building, social movements, interest group bargaining, and shifts in elec- toral behavior and public opinion. All of these have combined and played out in real time in the fulcrum of individual policy areas. Another key feature of our Reaching for a New Deal project is its focus on what government actually does—and what battling political actors are trying to get government to do, or stop doing. Too much punditry and social science today discuss everything in politics except the pro- grams and government actions that really matter. By contrast, we start with those actions. We probe the economic steps taken, and not taken, by the Obama White House, and investigate in detail eight major realms of government endeavor where Obama and his allies have attempted major redirections in the scope and content of domestic public policy. We look at health care, higher education, financial reform, labor law, elementary and secondary education, immigration regulation, energy and climate-change policy, and—last but not least—taxes and government revenues (how to pay for it all). In each area, we describe what Obama and his allies set out to change, spelling out how agendas were set during the election campaign and the early months of this presidency. We then probe the priorities set in Con- gress and the cabinet and analyze the fate of major domestic policy initia- tives. Our analyses go beyond what President Obama himself and his ad- 8 Reaching for a new Deal ministration decided to do or avoid doing at various junctures, because American politics is not solely or even primarily a story of presidential choices, style, or personality—even if a good many pundits and some aca- demics remained overly obsessed with such personality-oriented accounts (Jacobs and King 2010). Our challenge is to develop a real-time holistic approach that looks at all of the maneuvering actors, and the opportuni- ties and constraints they have faced within evolving institutional and po- litical contexts. In the remainder of this chapter, we look first at why circumstances seemed so ripe for another New Deal following the 2008 elections, and then probe how critical events and inherited conditions in government, politics, and the media have profoundly shaped what the Obama presi- dency attempted and achieved in 2009 and 2010—as well as what allies and opponents have done in response, giving rise to surprising political twists. We put our cards on the table about why an ambitious presidency that seemed to have strong winds at its back ran into fierce blowback, and why an American citizenry that seemed so hopeful about change in 2008 voted against the change president’s party in the November 2010 elec- tion—putting the breaks on much of Obama’s reform agenda and throw- ing him onto the political defensive leading into 2011 and 2012. Obama’s early presidency did indeed reach for another New Deal, and much of the ambitious agenda was furthered—indeed much more than is yet visible to many citizens and analysts. But the immediate political results, certainly, were not what anyone could have anticipated when that November 24 issue of Time magazine appeared on the newsstands in 2008. Instead, a resurgent Republican right, fueled by Tea Party activism, has upended political equations once again, raising the stakes at what will remain for some time a dramatic, uncertain, and pivotal moment in American de- mocracy and governance. whY DiD anoTheR new Deal SeeM PoSSible? As the 2008 elections wrapped up and the newly elected president and Congress moved toward taking office, there were a number of reasons to believe that the November election had opened the door to more than in- cremental or routine shifts in U.S. public policy and politics. First, the elec- tion outcomes themselves were remarkable (Todd and Gawiser 2009). Most presidential elections from 1992 to 2004 had ended up in plurality victories, such as Bill Clinton by 43 percent in the three-way 1992 contest, or in very close outcomes, virtually tied between the Democratic and Re- Reaching for a new Deal 9 publican contestants, such as Clinton with 49.2 percent of the vote in 1996 and Bush with 47.9 percent in 2000 and 50.7 percent in 2004. But Barack Obama won decisively, especially for a Democrat in recent memory—and amazingly decisively for an African American with a foreign parent. Oba- ma’s margin over John McCain was 53 percent to 46 percent in the total popular vote, and 365 to 173 in the electoral college. At the same time, congressional Democrats strengthened their majorities in both the House and the Senate—carrying forward a partisan shift that started in 2006. The Democratic margin kept growing in the Senate, and eventually, midway through 2009, when the protracted court battles in Minnesota were finally settled, the fifty-eight Democrats plus two Independents in the Senate Democratic caucus ended up with what the media trumpeted as a filibus- ter-proof supermajority. The U.S. elections of 2006 and 2008 were also marked by the mobiliza- tion of new blocs of voters into greater participation, as well as enhanced support for the Democratic Party. Younger voters raised their level of en- gagement; African Americans turned out in droves to vote for the first black presidential candidate; and Latino voters increased their participa- tion and shifted toward greater support for Democrats. After the 2008 election, commentators especially noted the age-gradient of partisan divi- sions, and trumpeted the Democratic Party, preferred by under-forty-five- year-olds, as the party of the future (see, for example, Runyan 2008). Obama also won election at a juncture when most Americans of all po- litical persuasions were disillusioned with his predecessor, George W. Bush, and had soured on the economic and foreign policy directions the country had taken when the Republican Party controlled both Congress and the presidency from 2000 through 2006. To reach the White House backed by congressional party majorities after the country has repudiated the predecessors is an excellent situation for an ambitious president deter- mined to change policy direction (Skowronek 1993). In addition, some analysts would say that it is good for a president who wants to use federal power vigorously to come to office during a deep economic downturn, when businesses and average citizens want and need government help (Kuttner 2009). During the original New Deal, cer- tainly, President Franklin Roosevelt and the Democratic Party were able to do a great deal amidst the massive Great Depression. Similarly, Obama took office just as an epochal financial meltdown was plunging the coun- try into the deepest economic downturn since the 1930s. Obama’s chief of staff, Rahm Emanuel, famously quipped, “You don’t ever want a crisis to go to waste” (quoted in Krugman 2008). In fact, the advent of the financial and subsequent economic crises helped Obama and the Democrats build 10 Reaching for a new Deal their margins of electoral victory against McCain and the Republicans in the 2008 election. Racial prejudices that many electoral analysts expected to hurt Obama in competition with McCain were mitigated in many parts of the country by the overriding desire of white working-class voters to elect a Democrat rather than a Republican to guide the economy. Obama assumed the presidency after being unusually straightforward with the voting public that he would seek to change the direction of fed- eral social and fiscal policies. During the 2008 general election and, before that, during the interminable Democratic Party primaries, Obama had vividly spoken about redistributive issues in a way highly unusual for any Democratic presidential nominee in recent memory. He talked quite frankly about the need to do more to help average Americans, and didn’t back off from the proposition that rich families, making more than $250,000 a year, should pay higher taxes. No Democratic presidential candidate since the ill-fated Walter Mondale, during the 1984 campaign, had been as unambiguously willing to talk about raising taxes for anyone. What is more, Obama called for promoting growth and economic renewal from the bottom up rather than the top down to reinvigorate the American mid- dle class and broaden its ranks (2008). This amounted to more than empty talk following years of federal policies that had actually redistributed wealth upward across the country (Jacobs and Skocpol 2005; Bartels 2008, chaps. 1, 2; Hacker and Pierson 2010, chap. 1). Finally, politics is a team sport that calls for allies, coordination, and advance planning. Democrats and their allies had started making prepa- rations in 2006 and earlier to take control of lawmaking when the party next elected a president. The Center for American Progress and other Washington think tanks developed detailed policies for an incoming ad- ministration to consider. Progressives had developed a strongly networked set of activists and funders to lobby for reform in Washington, and had learned to use the Internet to mobilize supporters across the country. Al- lies in government had started to develop the capacity to move large-scale legislation. Thus Peter Orszag, the future director of Obama’s budget office, ran the Congressional Budget Office between January 2007 and November 2008, restocking its staff and developing sophisticated cost- estimating protocols in anticipation of the likelihood that a new Demo- cratic president and Congress would need to move forward efficiently with many ambitious legislative proposals (Lizza 2009). A decisive election, a public responsive to a new president’s calls for change, strong congressional majorities, and experts and movement allies ready to go—it all looked like a promising opening for the second coming of FDR. Reaching for a new Deal 11 caveaTS: The USUal obSTacleS To PolicY change Yet even at the height of the hoopla over a possible New New Deal, many political analysts sounded notes of caution. It is a well-known regularity that electoral outcomes tend to swing back and forth, especially in mid- term congressional elections held when one party has control of the presi- dency and both Houses of Congress. FDR’s 1936 landslide was followed by midterm losses of seventy-one seats in the House and half a dozen in the Senate; Lyndon Johnson’s Democratic Party lost forty-seven House seats two years after their landslide win in 1964. In general, the party in power has lost twenty-five seats in the House since World War II, and the losses have been higher when presidential approval ratings have slipped below 50 percent, as was the case for Obama during 2010. In general, older, richer, and whiter voters are the ones most likely to turn out in mid- term elections—and according to exit polling for the 2008 election, these were the demographics least enamored of Barack Obama (Todd and Ga- wiser 2009, 30–31). Analysts knew from the start—and so did Democratic Party strate- gists—that the president and his congressional copartisans would likely face electoral setbacks in 2010. Even as they sought to manage an overall national economic recovery, the White House and Democrats in Congress tried to deal with the looming 2010 electoral moment of truth by deliver- ing benefits and reassurance to older voters. But the probability of mid- term losses animated Obama and other Democratic leaders as they raced against the clock to accomplish major legislative breakthroughs before their congressional majorities were thinned or lost. Beyond normal electoral swings, it has long been well documented in survey research that Americans are ideologically cautious about strong government or governmental activism. Since the very beginning of mass surveys, researchers have noted that if you ask Americans abstract ques- tions—such as “do you agree that people in government waste a lot of money we pay in taxes?”—they favor the free market and oppose govern- ment intervention. If you ask about specifics, however—such as “do you support Social Security?” or “would you be willing to pay more taxes for early childhood education?”—they tend to support liberal positions about active government (Free and Cantril 1968; Page and Jacobs 2009). Ameri- cans are, in short, philosophical conservatives and operational liberals. This means that even if Americans approve many specific measures fur- thered by President Obama and the Democrats, their reflexive antigovern- ment worries can be evoked by political opponents—all the more readily 12 Reaching for a new Deal in a period of economic anxiety and uncertain progress in creating jobs. As a young, change-oriented president, Obama would have faced such wor- ries under any circumstances. But the spreading economic distress of 2009 and 2010 generated genuine fear that was readily exploited by political foes who equated even mild government activism with radicalism. Another obstacle that was clear to many analysts from the start lay in the divisions inherent in a large congressional majority. Substantial Demo- cratic majorities in Congress created opportunities for Obama, which he would exploit. Apparent openings to pass new legislation, however, were compromised by significant intraparty divisions that prevented the con- sensus in certain policy areas that would be necessary to overcome the filibuster. Partisan polarization has created the impression that America’s two major parties are similarly unified teams, that Democrats should be expected to support Obama’s full agenda, much as a British parliamentary party would back the prime minister. In truth, Republican legislative co- alitions do often approximate the bloc voting seen in a parliamentary sys- tem; this has been especially true in recent years, when Republicans held slim congressional margins and when right-wing interest groups made it clear that they would punish defectors with primary election challenges (Hacker and Pierson 2005). But congressional Democrats have long been fractured by ideology and regional and economic concerns. Many of them harbor deep suspicion and opposition about tightening government regu- lations or raising taxes even for the very wealthy. Ideological splits within the Democratic Party are reinforced on certain issues by regional divisions. For example, Obama’s call for energy reform was haunted by the split between Democratic lawmakers from coal- producing states and those from regions with businesses focused on de- veloping other sources of energy; and health care reform was slowed, in part, because of tensions between legislators from the (mostly midwest- ern) states that provide health care at lower cost and the (eastern and western) states where costs are higher (even taking account of the overall cost of living). In many specific policy areas, Republicans opposed to Obama’s agenda could find allies—or at least foot-draggers—within the Democratic Party. Despite the usual obstacles, during the first few months of the Obama presidency it appeared that major changes were afoot and might prove enduringly popular. Obama started out with sky-high public approval ratings, and quickly persuaded Congress to pass the American Recovery and Reinvestment Act (the so-called stimulus), which was not as large as progressives wanted to see but nevertheless injected nearly a trillion dol- lars into the economy and included initial resources for new policy initia- tives in education, clean energy production, and health care (Alter 2010, Reaching for a new Deal 13

135–37). The fledgling Obama administration quickly signed legislation about fair pay and children’s health insurance that had been vetoed under President Bush. What is more, the first Obama budget was a bold and readable docu- ment, not the usual snoozy bureaucratic treatise. A New Era of Responsibil- ity: Renewing America’s Promise outlined a very broad vision of how the new president planned to address major issues in education, health care, and energy and the environment (Office of Management and Budget 2009). The budget called for regulatory shifts and new directions in taxing and spending—for movement away from providing subsidies to favored private industries and tax cuts for the very wealthy; and toward broaden- ing access to higher education, stimulating K-12 school reform, paying for health insurance for all Americans, and encouraging new environmen- tally friendly programs. In contrast to the Republican legislative strategy of relentlessly cutting taxes and talking about spending cuts without de- livering them, Obama candidly proposed a fiscal policy that would ex- pand social benefits for middle- and lower-income Americans and pay for them with specific spending cuts and tax increases on the privileged. Countering long-term efforts to arouse ideological opposition to big gov- ernment in general, Obama and his allies aimed to stir the operational liberal aspirations of many Americans by pushing for specific measures to help key groups. Big trouble started brewing from the start of Obama’s term in 2009. Changing directions in federal policies in so many realms ran into more than the garden-variety difficulties we have already surveyed. Nearly two years after Obama’s inauguration, we can highlight a series of happen- stances and obdurate contextual realities that have profoundly limited and deflected Obama’s reach for another New Deal, or obstructed change altogether. As we look at key limiting factors in greater depth, it often helps to draw contrasts to the first New Deal of the 1930s—not because the nature and timing of events, let alone the structure of government and society, are the same between the 1930s and now, but because they are indeed differ- ent in telling ways (on this historical-institutional approach, see Pierson and Skocpol 2002; Soss, Hacker, and Mettler 2007). Comparisons across historical periods highlight major shifts in societal institutions and the overall U.S. political system, as well as flashpoints of conflict and se- quences of change. Taken together, the factors we are about to analyze have limited Obama’s ambitious reach for another New Deal. They also help us understand why fierce political backlashes greeted his partially successful and sometimes thwarted efforts to redirect federal policies on behalf of regular Americans in 2009 and 2010. 14 Reaching for a new Deal

RefoRMiST PReSiDenTS anD econoMic cRiSeS Although both Franklin Delano Roosevelt and Barack Obama came into office as change-oriented Democrats, the timing, nature, and severity of economic crises explain critical differences between Obama’s debut in 2009 and 2010 and FDR’s launch of the New Deal in 1933 and 1934. Roo- se velt took office several years into the Great Depression, when the U.S. economy was at a nadir; some 25 percent of Americans were unemployed and the nation was begging for strong federal action. Congressional Re- publicans and Democrats alike were ready to vote for the bills FDR sent them; and citizens battered by the Great Depression were open to the di- rect federal creation of jobs. By contrast, Obama took office amidst a sud- den financial seizure that was just beginning to push the national econ- omy into a downturn of as-yet undetermined proportions. Because FDR took charge at a moment of despair following a predeces- sor Republican president who had been unable to counter several years of deepening economic disaster, Roosevelt and his advisors knew they had to create jobs almost any way they could, and the president’s emergency proposals were voted through by legislators of both parties before they even saw the written texts (Patterson 1967, chap. 1). In contrast, Obama’s steps to spur recovery met from the start with a nearly universal wall of partisan opposition, because Republicans knew, as all experts did, that the country would plunge into deeper recession with unemployment balloon- ing for many months. Obama would end up being associated with steep economic decline and severe job losses, as Hoover once was. In addition, because the American people had yet to experience much of what was to come in the Great Recession, they could not know what to demand or ex- pect from initial federal recovery efforts. fixing the economy from the Top Down It is worth tarrying a bit on this last point. Because Obama took office without the full effects of the financial crisis hitting the supply of jobs and the operation of the Main Street economy, he arguably lacked FDR’s clear- cut opening to dramatize a full-blown national economic emergency and to pursue a full range of policies, including direct federal creation of large numbers of jobs. From the start, the new president, a cautious lawyer by training, heard key options taken off the table not just by Republicans and conservative Democrats in Congress and the Beltway media, but also by his own economic advisors, who were leery of disrupting existing busi- Reaching for a new Deal 15 ness practices and hesitant to embrace policies outside conventional boundaries (Alter 2010, chaps. 11, 12; Hirsh 2010). The nature as well as the phasing of the crisis affected Obama’s eco- nomic leadership, real and perceived. His strong election victory over Mc- Cain was spurred by the Wall Street crisis that broke in September 2008, as conventional wisdom has long recognized. But looking deeper, we can see that candidate Obama was drawn into cooperation with the outgoing Bush administration starting well before the November election, as well as during the transition. Decades earlier, FDR had deliberately avoided Hoover’s invitations to work together, but with the economic meltdown of late 2008 and 2009 just getting started, Obama could not avoid transitional efforts to prevent the initial Wall Street crisis from spiraling out of control, a catastrophe that would have taken down the world financial system and plunged the United States into a massive and prolonged depression. In short, FDR came in when the patient was near death, whereas Obama wanted to keep the patient’s raging fever from turning into pneumonia. Cooperation to deal with Wall Street woes started in earnest during the campaign in mid-September, when GOP candidate McCain tried to call off the first presidential debate and hold a summit at the Bush White House. As Jonathan Alter reminds us in The Promise: President Obama, Year One, this campaign stunt backfired on McCain because Obama was the one who looked cool, calm, wise, and in charge (2010, 9–14). What also mat- tered about this episode was that soon-to-be president-elect Obama be- came engaged with Bush administration efforts to mitigate the financial crisis through the politically unpopular decision to build congressional support for a massive financial rescue plan, the Troubled Asset Relief Pro- gram (TARP). Starting at that misguided September 2008 session at the White House, Obama gained confidence that he could master complex issues and work with financial experts—yet, as we can now see, he was also drawn into a save-Wall-Street-first approach to economic recovery that was highly unpopular and fabulously expensive. This was inevitable in a sense, but also ironic. The insurgent Demo- cratic candidate who campaigned by promising a bottom-up approach to economic growth and renewal in America started his presidential eco- nomic efforts amidst a bipartisan scramble to help Wall Street first. A cou- ple of months later, President-Elect Obama would also urge President Bush as his term wound down to support legislation to rescue collapsing U.S. auto companies. To millions of Americans beginning to face the reali- ties of declining family fortunes, underwater mortgages, and looming pink slips, all this looked like helping the big guys float free and leaving ordinary Americans to drown. 16 Reaching for a new Deal assembling a Team and Planning for Recovery Obama’s initial economic efforts also limited his purview going forward. After his victory at the polls, the president-elect quickly decided that two Wall Street–connected experts, Timothy Geithner and Lawrence Summers, would lead his White House economic advisory team (Alter 2010, 49–53). In a financially induced crisis, Obama believed they were uniquely quali- fied to figure out where reforms were needed—and perhaps persuade bankers to help the larger economy going forward. But building this kind of economic team—especially given the well-known proclivity of Sum- mers for taking control of the process of generating policy alternatives— also meant that Obama was not going to hear day-to-day from other kinds of economic experts who thought of jobs first, or who saw U.S. economic recovery over the longer term as requiring commitments to structural transformation and seeding innovative new industries. Paul Volcker joined the administration, but was sidelined for much of the first year (Hirsh 2010). Nor would prominent noneconomists be involved in economic pol- icy design, as social worker Harry Hopkins was in FDR’s brain trust. Drawing on established macroeconomic wisdom and the purported common sense of the financial community to which they were connected, Summers and Geithner advised Obama to counter the Wall Street crisis with bank bailouts that imposed minimal penalties, hoping to cajole and soothe bankers into resuming lending. They urged Obama to avoid na- tionalizing banks and other aggressive steps out of fear that such under- takings could cause “a disastrous run on those banks” (Alter 2010, 206). Beyond that, Obama’s team, joined by other orthodox economic advisors, urged spending a lot of federal money as quickly as possible—which nec- essarily meant spending on established programs that could be expanded without new planning or protracted negotiations. Tax cuts would also be added into the Recovery Act, accounting for a third of the overall stimulus package even though most economists knew they would deliver less bang for the buck than direct spending. Calm the bankers, cut taxes, and quickly spend as much as Congress would enact for projects that could be imple- mented without a lot of corruption, and then be patient as the economy slowly recovered over the course of 2010 and 2011. That was the prescrip- tion. An energetic push to boost employment through massive infrastructure construction or industrial innovation—let alone any New Deal–style pub- lic employment programs—was not earnestly recommended to Obama. There were certainly outside economic mavericks like Paul Krugman who said from the start that Obama was proposing to spend too little and do too much to accommodate banks and businesses. Members of Congress Reaching for a new Deal 17 like Jim Oberstar pressed for large investments in transportation infra- structure. But, for the most part, Obama seemed to cleave to orthodox ex- perts. “When he brought in Summers and Geithner he just thought he was getting the best of the best” (Michael Greenberger as quoted in Hirsh 2010). Obama hoped to use the stimulus to seed significant green energy projects, a move that would have injected more innovative industrial pol- icy into the emergency recovery effort. But according to Alter (2010, 85– 86), Obama backed off when it was pointed out that legal wrangling over environmental regulations could slow spending; he also retreated when Summers pushed back against the idea of featuring large infrastructure efforts as part of the recovery effort. Endorsing the bold yet orthodox recovery steps his advisors urged upon him, Obama’s White House tried to hit the middle on the overall price tag. Some economists, such as Paul Krugman, argued from the get- go that he needed to get Congress to spend more than a trillion, to make up for the drop in consumer demand, and to keep the proportion devoted to tax cuts to a minimum. But such advice did not seem realistic to the Obama White House, which felt it had to stay under a trillion to get Congress to pass any stimulus (Krugman 2010a). Furthermore, perhaps naive ly, the newly installed Obama hoped to woo congressional Republi- cans with substantial up-front tax cuts of the sorts they had claimed to support in the past. Because Obama offered Republicans policy conces- sions and got less than a handful of votes for his outreach, most postmor- tems on what went wrong with the stimulus focus on his unnecessary concessions about taxes (instead of more stimulative direct spending) as well as on the inadequate size of the stimulus package given the collapse of consumer demand. But his choices were understandable for a brand- new president who had promised the 2008 electorate that he would change the political tone in Washington. Moreover, as we discuss later, it is not at all clear that Congress would have passed a bigger, more spending-heavy Recovery Act, no matter what Obama had proposed.

Missing Jobs In retrospect, the fact that Obama’s economic recovery strategy was not truly a jobs program turns out to matter more (Alter 2010, 85–86; Hirsh 2010). The American Recovery and Reinvestment Act is better understood as a Hail Mary pass to goose aggregate economic growth by 2010, hop- ing that jobs would come back in tandem with the revival of overall GDP growth, or following soon after growth resumed. The absence of a jobs program stemmed, in part, from the decision of Democratic leaders to push the large stimulus package through Congress very soon after 18 Reaching for a new Deal

Obama’s inauguration, both to stave off the looming financial and eco- nomic disaster as best they could and to conserve time within the presi- dent’s honeymoon period for the pursuit of long-planned efforts such as comprehensive health care reform. The idea was to get some of those re- forms through in ample time to take effect before the next elections. Yet this approach meant that the White House largely deferred to congressio- nal appropriators, letting them push money into their long-standing wish lists. A bold plan for creating new jobs would have taken much longer to formulate, and would have run into many congressional buzz-saws. President Obama’s quickly devised economic recovery strategy also confused American citizens, many of whom did not see how heightened federal spending, funded through a growing deficit, could work. Most citizens wanted jobs saved or available, which Obama’s spending and tax cuts would, at best, bring about only indirectly and gradually. By the sum- mer of 2010, even aggregate growth was slowing, and unemployment re- mained near 10 percent. Citizens looked back and believed that Obama— supported by his Democratic Congress—had first saved Wall Street and other corporate giants, and then left much of Main Street foundering. Dur- ing the run-up to the November 2010 election, and afterwards into 2011, Obama and his party were hampered by too little job growth and the sense among many Americans that “federal spending does not work” to create economic recovery (Silverleib 2010)—or, worse, that the usual insiders were the real beneficiaries of recovery efforts. In one of several piercing ironies, the winds of populism and change that swept Obama into office in 2008 turned against him two years later, and threatened to block further government actions to promote economic recovery and broaden social op- portunity.

PaRTiSan PolaRizaTion anD RePUblican obSTRUcTion As noted, at the start of the first New Deal, President Franklin Roosevelt enjoyed bipartisan support for recovery efforts launched at an economic nadir. But even though President-Elect Obama had partnered with Repub- lican officials to handle the 2008 financial crisis during the closing days of the Bush presidency, his own initial recovery proposal got virtually no votes from congressional Republicans, even as their home states clamored for fiscal relief. As the months went by, Republican opposition hardened and grassroots populist movements arrayed under the Tea Party banner took to the streets to excoriate the president and any and all new federal initiatives being debated in the 111th Congress. Both GOP strategic calcu- lations and the birth of a media-driven grassroots movement on the far Reaching for a new Deal 19 right figured into the crystallization of intense opposition to Obama’s presidency and policy proposals—despite the fact that the Obama White House was trying to prop up and revive the private sector in the U.S. economy. goP leaders Decide to oppose everything At the elite level, Republican congressional leaders attuned to a dispirited, heavily white-southern voter base—and goosed on by flamboyant right- wing media commentators—decided from the start of Obama’s presi- dency on all-out opposition. This was a cold-blooded political bet, possi- ble in light of the economic down-spiral in the wake of the Wall Street bailout undertaken by the outgoing Bush administration. Two-thirds of House Republicans voted against the unpopular bailout when it first came up under Bush, and only half voted for the final legislation, despite pleas from Bush officials and business leaders after the stock market plunged following the abortive first congressional vote. As the Democrats took charge, congressional Republicans aimed to pin the bailout on Obama and, indeed, succeeded in convincing many voters that the bailout and the American Recovery and Reinvestment Act (the stimulus) were one and the same. It was all a bunch of expensive federal handouts, congressional Re- publicans told the public—and that message gained a lot of traction, even if particular GOP representatives and senators regularly went home for ribbon-cutting ceremonies celebrating job-creating stimulus projects they had voted against in Washington. Republicans knew that Americans like the specifics of government spending, even when they doubt the value of higher spending overall. Republican strategists also knew that if unemployment reached a high level, unified Republican opposition to Obama’s agenda in Washington would position their party as the only alternative to what they would be able to call a failed presidency and 111th Congress. In addition to facing partisan efforts to blame him for using emergency federal spending to stave off dire economic troubles that originated dur- ing the Bush presidency, Obama also inherited Bush’s huge federal budget deficit—bills run up by off-budget wars, tax cuts for the very wealthy, and a new Medicare drug benefit not paid for with future revenue streams. Add the inherited unpaid bills and declining taxes due to the recession to the unavoidable cost of bailouts and the stimulus, and it was easy to see that President Obama started out with deficit problems that would only grow—quite apart from funding for any of the new long-term reform measures he had promised the electorate during 2008. Republicans knew 20 Reaching for a new Deal they could take political advantage of the new president’s terrible luck, and they decided to do so.

Tea Partiers erupt Any chance that any Republicans in Washington might have drifted to- ward cooperation with the Obama administration—the nation faced an emergency, after all, so it might have seemed logical—dwindled after the Tea Party networks sprang to life early in 2009. Conservative activists in and around the Republican Party were understandably demoralized in the aftermath of the 2008 elections, which left pundits projecting a perma- nent shift toward the Democrats. But when CNBC commentator Rick San- telli went on a rant against “freeloaders” supposedly taking advantage of federal mortgage-reduction programs and called for a new American “Tea Party” to protest an overweening federal government, conservative activ- ists across the country recognized a great opportunity to regroup and re- brand themselves. Activists in many states warmed up Internet lists and began to convene local meetings and protests, and Fox reporters and com- mentators helped national organizers and financial backers advertise col- orful national protest days—always touting the efforts for weeks and days before any actual happening (see Williamson and Skocpol 2010, figs. 4 and 5). Then, when the Fox-encouraged protests happened, the rest of the me- dia flocked to cover the events and follow up with grassroots networks holding meetings across the country. For the critical first year of the Obama presidency, and especially at peak moments like the 2009 summertime town meeting outbursts over health care reform, mainstream media outlets found it irresistible to cover outlandish protest actions with older white demonstrators dressed up like Revolutionary War patriots and carrying extremist signs. It made for great television, and constant online buzz, even if most Americans were not in- volved and had no idea who these folks were. For many months, analysts debated whether this was a grassroots protest of unaffiliated indepen- dents disillusioned with Obama. As it gradually became clear through na- tional surveys and ethnographic work, Tea Partiers are mostly previously active conservative Republicans, older, whiter, and more well-to-do on average than other Americans (Williamson and Skocpol 2010). They es- pouse more stereotypical suspicions of nonwhites than other Republicans, let alone Americans overall, and are deeply angered by the suspicion that unworthy, “freeloading” people—including immigrants, the young, and lower-income minorities—might get benefits from the federal govern- ment. They fear that such expenditures, even in a recession, could end up Reaching for a new Deal 21 costing people like them higher taxes or could squeeze programs such as Medicare to which they feel entitled. Tea Party anger is diffuse but intense; it reached a boil among people who turned out disproportionately for the 2010 midterm elections, and remained primed to turn out again for the next presidential contest in 2012. Tea Party organizers are highly skillful and practical in how they contact and motivate voters (Williamson and Skocpol 2010). In key states like Virginia, Tea Partiers have moved from organizing loose local net- works to creating an ongoing federation that can affect elections and policy battles at local, state, and national levels. Whatever the long-term electoral effects end up being, Tea Partiers have their greatest initial im- pact on Republican politicians, pressuring officeholders to oppose or repeal Obama initiatives such as health care reform, and threatening pri- mary challenges against Republicans who show signs of dialogue or com- promise with Democrats. Primary defeats in 2010 of established conserva- tives such as Bob Bennett of Utah struck fear into other Republicans in Congress and made them ever more reluctant to compromise on policy or personnel in 2011 and 2012. For GOP moderates such as Senator Olympia Snowe of Maine, the best hope for staving off a primary challenge from Maine Tea Partiers is to avoid breaks with GOP leaders in Congress, who remain determined to undermine Obama legislative and budgetary pri- orities.

Polarization Deepens Among both GOP leaders and conservative grassroots activists, in short, rightward-pulling ideological polarization expressed through party poli- tics has become more intense under Obama, even though he campaigned for office with appeals to widespread public desires for bipartisan coop- eration and has repeatedly reached out to Republicans in Washington. We need to keep in mind the longer-term trends that Obama has probably been powerless to counter, especially once his GOP opponents chose ob- struction. Decades ago, in the middle of the twentieth century, ideological and party divisions did not entirely overlap in U.S. electoral politics. There were many conservative southern Democrats and a fair number of moder- ate to slightly liberal northern Republicans. Congress often functioned through old-boy bipartisan deals. All of this started to disappear after the civil rights movement of the 1960s, as the Republican Party turned toward the right and became the home of white southerners. Polarization, especially at the level of elected representatives and advo- cacy elites, proceeded apace over the last part of the twentieth century, 22 Reaching for a new Deal sorting ideological conservatives into the Republican Party and liberals into the Democratic Party (McCarty, Poole, and Rosenthal 2008). Beyond such sorting, conservative activists used money and grassroots campaigns to pull the Republican Party even further to the right, especially in con- gressional voting and public debates over social issues and taxes (Hacker and Pierson 2005; Sinclair 2006). Polarization has gone further on the Re- publican than on the Democratic side, and polarized congressional voting has tended to favor conservative obstruction of social policy initiatives to help lower- or middle-income people (Bartels 2008; McCarty 2007). No wonder, then, that when a new Democratic president arrived in office promising to use federal initiatives actively to favor lower- and middle- income people, long-operating conservative forces were determined to mount all the opposition they could. Such “just say no” strategies failed to stop health care reform and might have backfired more broadly had it not been for continued economic sluggishness. History shows us that demo- cratic publics are open to fearful messages in periods of high unemploy- ment and threatened family fortunes.

PolicY iMPlicaTionS of congReSSional RealiTieS An activist president can move forward on various fronts—from attempt- ing to shape public opinion to making court appointments, from action through regulatory bodies and executive agencies to asking Congress to pass legislation. Obama has of course pushed initiatives across the board; yet many of his choices about when and how to proceed, as well as the issues he has prioritized, have depended on what legislators thinking of their own interests were willing to do, amidst ongoing struggles among lobbyists and social movements. herding Democratic cats After 2008, the Democrats had substantial margins in both the House and Senate, but only in the House were they truly in control—when they could get their intraparty act together. The Speaker of the House can control through simple majority votes which legislation is voted upon, when the vote occurs, and the handling of amendments. Senate rules, by contrast, slow things down (Binder and Smith 1996). A single senator can object by placing a hold on nominations and bills, often secretly, and by custom the minority can request many delays in committees and on the floor. What is more, the potential exists for the minority to demand a supermajority vote, sixty rather than fifty-one, on virtually all matters—from procedure Reaching for a new Deal 23 and presidential nominees to the enactment of legislation. The filibuster— which takes sixty votes to break—used to be reserved for major, contro- versial issues, but has been invoked more frequently in recent decades (Sinclair 2009; Klein 2009). The filibuster has been invoked especially fre- quently, indeed unremittingly, when Republicans face Democratic leader- ship. Under Barack Obama, Republican obstructionists have decided to invoke the supermajority rule on almost every issue small and large; hence they have prevented the president from assembling his administration in normal time, kept much-needed judicial appointments from filling court vacancies, and blocked most reform initiatives. In general, Senate action by filibuster ensures that Americans see a dysfunctional government, with everything slowed to a crawl. The filibuster was invoked more often in 2009, for example, than in the entire decade of the 1950s (Frumin and Reif 2010). As leaders of a party and angry conservative movement that wants to undercut and hobble government when Democrats have any say, GOP leaders have made the calculation that such behavior will help rather than hurt their cause with the American people. The press emphasized that Obama and the Democrats held a suppos- edly filibuster-proof sixty-vote majority for many months during the 111th Congress—from the time when Senator Al Franken was seated in July 2009 following Minnesota’s contested election, until mid-January 2010, when a Republican, Scott Brown, surprisingly won a special election to fill the seat of the late Senator Ted Kennedy. But in truth, there never was a reliable sixty-vote margin. Senator Joe Lieberman, an Independent, could never be counted on to stick with anyone’s team, or even his own previous positions; and various conservative Democrats regularly defected. Oba- ma’s Democratic margins in Congress never reached the level enjoyed by previous Democratic presidents (Silver 2010). Throughout his presidential term, Jimmy Carter had a stronger Senate majority than Obama. And FDR, John Kennedy, and Lyndon Johnson had larger majorities to work with when they pushed far-reaching social programs—although in those days, of course, many Democrats were southern conservatives. Because Republicans in the 111th Congress remained throughout 2009 and 2010 almost entirely opposed to Obama’s initiatives, the drama in one policy area after another focused on what sorts of Democratic coalitions could be formed, and whether defections on any given issue would make forward movement impossible. Obviously, legislative action was always precarious in the Senate, where any one or two Democrats could kill all possibility of forward movement. But even in the House, where the Dem- ocrats had a seventy-five-vote margin in a majoritarian chamber, various kinds of issues could peel off dozens of Democrats, if ideological or re- gional concerns were aroused, or businesses connected to particular rep- 24 Reaching for a new Deal resentatives started pushing back against Democratic proposals. House as well as Senate Democrats remained an incoherent coterie of assorted liber- als along with many moderates and conservatives. The nonliberals in- cluded highly vulnerable representatives elected in competitive or even Republican-leaning districts: forty-eight House Democrats were elected in 2008 in districts that voted for McCain and many were defeated in the 2010 elections, for example. Some of these endangered Democrats, like Virginia’s Tom Perriello, won in 2008 by a few hundred votes in Republican-leaning districts and yet still went on to fully support Obama’s agenda in apparent acceptance of what would be their defeat in 2010. But such stoicism was unusual. Many Democrats anticipating tough reelec- tion battles groped for self-preservation by ostentatiously displaying in- dependence from President Obama and their chamber’s party leadership even though their prospects in 2010 were in truth primarily tied to the partisan balance in their districts. In the U.S. political system, neither the president nor party leaders have the power to discipline legislators for disloyalty, as leaders in a parliamen- tary system would be able to do. Although Democrats in the 111th Con- gress achieved a measure of unity on some legislation, enormous efforts were required to build supportive coalitions. And majorities simply could not be assembled for certain Obama priorities. Democratic unity was se- lective and sensitive to what came up when on the calendar, and in what sequence. What is more, as the 2010 midterm election loomed and Presi- dent Obama’s initially high approval ratings fell below the symbolically important 50 percent, many House and Senate Democrats stopped coop- erating with Majority Leader Harry Reid and Speaker Nancy Pelosi, as exemplified by the defection of dozens of moderate House Democrats from their leadership’s call to vote on extensions of tax cuts before No- vember 2010. Pelosi’s plan to extend cuts for the middle class but to allow those on income above $250,000 a year to expire seemed like a logical move for a Democratic House but was blocked by skittish House Demo- crats who feared nonstop attacks from wealthy interests and Republican opponents. The public saw disarray in the governing party of 2009 and 2010 because, in fact, there was disarray. one waY oR anoTheR Across the various policy areas we study in the book, the avenues open to the White House to move priorities for policy change during the 111th Congress depended on conflicts and coalitions among Democrats. On some issues, such as health care reform, the concerns of more conservative and more liberal Democrats could (with great difficulty) be brokered by Reaching for a new Deal 25 patient congressional leaders. Measures meant to address long-term defi- cits that concerned conservative Blue Dogs could be married to regula- tions and benefits designed to help lower- and middle-income Americans, as most moderate and liberal Democrats wanted. But in other major issue areas, such as immigration and energy, regional divisions among Demo- crats were profound and proved unbridgeable. Grand legislative bargains in those areas required some Republican votes, because quite a few Dem- ocrats were certain to be lost in any attempted bargain. When even a handful of Republican votes were not forthcoming, given the increasingly lockstep Republican obstructionist strike against Obama, bold legislation proved impossible. In the labor law area, for instance, conservative Demo- crats in the Senate were never willing to accept any version of the Em- ployee Free Choice Act favored by the labor unions, and Republicans have long been adamantly opposed to it. White House perceptions of the possibilities in the 111th Congress drove its choice of what issues to pursue when and whether to call for legislation or proceed through administrative and regulatory efforts. When the presi- dent’s agenda made little headway in Congress given Republican obstruc- tion and too little Democratic unity, the White House turned instead to administrative and regulatory measures—either in anticipation of the dead end in Congress, or after the fact. When labor law changes faltered, for example, Obama circumvented Republican obstruction in the Senate and put a lawyer favored by the labor unions onto the National Labor Relations Board; and Labor Secretary Hilda Solis energetically enforced existing workplace regulations that Bush administration officials had left loosely enforced. Similarly, the Obama administration took regulatory steps to help the environment, even though major legislation had stalled in Congress. Most commentators focus on the president as a leader who advances legislation in Congress, but Obama built on decades of expansion in the executive branch’s institutional capacity to further presidential priorities by rule-making and other administrative means. Initiated by FDR and then substantially strengthened by Republicans, the administrative presi- dency enabled the Obama White House to circumvent congressional road- blocks and instead use the Office of Management and Budget to monitor and control policymaking in the executive branch, while relying on loyal political appointees in the agencies to follow the White House agenda. Our investigations of eight key policy areas elaborate the specific inter- play of political conditions and alternative modalities of presidential ac- tion. But the point to stress here is a broader one. Outside observers and critics from the left have excoriated the Obama administration for not leading on major issues—such as environmental or labor legislation. But 26 Reaching for a new Deal his room for maneuver was highly constrained for reasons no single pres- ident could have controlled. The possibilities—and impossibilities—for assembling Democratic coalitions in the 111th Congress were decisive to how Obama made headway as he pursued an overall agenda for major policy changes during 2009 and 2010. Public pushes for big legislation were not always the best way forward. when ideology and Partisanship overlap Of course, in the original New Deal of the 1930s, congressional coalitions were often decisive and dispositive as well. A conservative coalition formed in Congress by 1934 and placed limits on FDR’s initiatives for the remainder of the domestic New Deal of the 1930s (Patterson 1967). Yet New Deal divisions were not a purely partisan matter, because many of the conservatives in that bloc were southern Democrats—indeed they were chairs of powerful committees. In the 1930s, as now, proposed fed- eral reforms evoked fierce counterpressures, but Obama faced a more par- tisan division of Democrats against Republicans than FDR did in his day. Of necessity during 2009 and 2010, Obama’s White House repeatedly caucused with Democratic House Speaker Nancy Pelosi and Democratic Senate Majority Leader Harry Reid, looking for ways to coordinate agen- das and move key bills through the many hurdles that mark today’s legis- lative process, especially in the Senate. Even though the watching public might not understand why Democrats spent so much time negotiating among themselves, or why the president couldn’t just tell Congress to “get it done,” the early Obama administration understandably devoted much effort to prodding and cajoling Congress in consultation with key congressional Democrats. This happened not merely because Obama is a former senator and thinks in legislative terms, and not only because his former chief of staff, Rahm Emanuel, is a seasoned wheeler-dealer from the House of Representatives (Bai 2010). More than that, Obama and his White House aides knew that the 111th Congress was their best chance to further big legislative reforms. To take advantage of congressional Demo- cratic majorities, they devoted enormous time to working with the con- gressional leaders to assemble fragile and shifting coalitions. The congres- sional sausage-making involving the president was confusing and dispir- iting for Americans to watch, but a necessary price for moving big legisla- tive reforms. But the understandable efforts of the White House to work with Demo- cratic leaders looked purely partisan because liberal versus conservative differences have become closely aligned with the major party labels. Much of the national system of political communication is geared to give extra Reaching for a new Deal 27 voice to opposition that comes from the minority party. In the Obama ad- ministration, therefore, Republicans enjoyed the regular access to the me- dia that the minority party automatically receives. And they used that ac- cess, in part, to cry foul about the very congressional consultations they boycotted and tried to obstruct. On the one hand, GOP leaders refused to enter into legislative bargains or talk about compromises with the White House, and on the other claimed that the Democrats were excluding them in favor of high-handed partisan fiat. Republicans were able to prevent Democratic action, or else force Democrats into elaborate bargaining to hold coalitions together—all the while decrying partisanship and blaming Democrats for delays and special deals, such as the Cornhusker Kickback used during the Senate endgame in health care reform to cajole Ben Nel- son of Nebraska to join other Democrats to break the Republican filibuster in late 2009. Through all of this, Obama and congressional Democrats ended up looking to the larger public both responsible for partisan rancor and in- competent at settling legislative quarrels. The primary problem, though, lay not with Obama or with Democrats as such, but with laborious in- stitutional rules that fostered deadlocks and delay. The price of moving major legislation was to absorb the public punishment and loss of time associated with assembling complex coalitions. There was little choice if Obama and the Democrats wanted to act to save the economy and try to carry through on major campaign promises. Enduring repeated Republi- can charges about partisanship and deal-making was the price of actually trying to govern in an era when ideology and party identity aligned so closely.

MeDia cliMaTe anD PReSiDenTial coMMUnicaTion When FDR communicated with everyday Americans, he enjoyed a com- paratively unfiltered opportunity. Although established newspapers were largely hostile to him during the 1930s, his famous fireside chats broadcast on the radio reached millions, revealing both the scope of that broadly shared communication modality and the eagerness of all Americans to hear from their president in a time of national crisis. The media dynamics surrounding Obama’s presidency have been quite different. White House and Democratic messages passed through the refracting filter of commen- tators, whereas conservatives projected their messages through major me- dia outlets openly aligned with the GOP that in turn influenced agendas for other outlets in a fragmented and competitive media environment. This assertion may come as a surprise to some, because during the 2007 28 Reaching for a new Deal and 2008 primary and general election campaigns, Barack Obama and the Democratic Party proved extraordinarily adept at shaping public percep- tions and using a mesh of old and new media to motivate and activate voters (Wolffe 2009). Part of Obama’s appeal to elites within the Demo- cratic Party—the super delegates, the majority of whom ended up swing- ing his way in the contest with Hillary Rodham Clinton—was his ability as a communicator and the capacities of his political operation to reach and activate millions of voters. Observers within and beyond the Demo- cratic Party expected President Obama to continue to frame public issues successfully in major speeches, and expected his White House and his Democratic National Committee to engage in effective ongoing communi- cation and mobilization on behalf not just of the president’s policy agenda and eventual reelection, but also in support of all Democratic candidates. That it has not worked out that way is an understatement, and this seems puzzling to many. The explanation for weak popular mobilization after Obama took office lies in part in the effort to reorganize Obama for America, the grassroots election operation, into an arm of the Democratic National Committee called Organizing for America. Grassroots activism works better when it is loosely linked to centralizing institutions; and be- sides, it is much harder to mobilize people for a congressionally centered, year-long legislative battle like the one for health care reform than it is to focus efforts on electing a president on one certain date (Dreier 2010). The mystery about Obama’s media presence and messaging seems deeper. To be sure, President Obama is a new-media user just as FDR was in his day. Just as FDR used radio fireside chats to get very regularly into the ears of ordinary Americans, Obama records weekly YouTube presi- dential addresses that are watched by millions of Americans at the click of a computer mouse. And Obama does sit-down interviews with jour- nalists, supplemented by appearances on soft-format popular television shows such as The View and late-night comedy hours, to reach people without going through formal news conferences or other formats filtered by professional reporters. Obama does quite well in such direct visual for- mats. fragmented Media and Segmented audiences But here the cross-era similarities in creative presidential communication end, because Obama’s White House faces an institutionally fragmented media environment that segments listening, viewing, and online audi- ences in ways that make attention fleeting, even as Americans divide into different communicative and reality communities (Prior 2007; Shapiro and Jacobs 2011). All contemporary institutional leaders, including the Reaching for a new Deal 29 president of the United States, find it hard to get an overall message through to most Americans at the same time—a situation that is some- what modified during presidential elections and huge crises like 9/11, but otherwise prevails. What is more, intense commercial competition within the fragmented institutional setting means that issue entrepreneurs push- ing controversies from the margins can quickly inject a controversy into intense coverage across channels (Dreier and Martin 2010). Critics of the White House, left and right, but especially right, have a lot of agenda- setting advantages. The Republican Party and right-wing controversy- peddlers have, in particular, been aided by Fox News, a massive, widely watched television network unabashedly aligned with the GOP. Other networks try to compete with Fox either through imitation of formats if not content (CNN, quite often) or through a degree of differentiation (MSNBC), but either way, the premium is placed on magnifying or argu- ing with highly provocative voices that first appear on Fox (or on right- wing blogs en route to Fox). In due course, even the proudest old-line media, including newspapers like the New York Times, allow some of their agenda to be taken up by top- ics launched from the right-wing noise and echo machine. More often, the old media splinter the communications by Obama and Democrats by rarely quoting them at length and counterbalancing them with competing interpretations. Republican messages are delivered intact, but Democratic ones are garbled. Beyond that, news media sponsor incessant polls that reinforce contro- versial narratives by repeating the same phrases and accusations as ques- tions—often asking the public about simplified stereotypes of complicated matters, such as government takeover of health care or the imposition of so-called death panels, that citizens barely understand—and then report- ing the findings and trends as if they were popularly given. Even avowedly leftist or liberal media sources, from print media to radio and television and blogs, end up devoting a lot of their space to arguing with the loudest right-wing provocateurs or reporting polls about simplified choices, su- perficial controversies, or election horse-races measured months before most voters are paying close attention. When liberal outlets go beyond such back and forth, they often criticize the White House from the left. Amidst all of the cacophony going on 24/7/365, it is very difficult for the president, let alone congressional leaders trying to push forward with difficult legislative initiatives, to communicate accurate information about what is going on. Thus, during the protracted health care debates, wildly false ideas and information crowded out accurate information and aroused public fears and disgust that far outran the realities of what was in the legislation. 30 Reaching for a new Deal

More broadly, the fragmentation of the media and the resulting intensi- fication of divisions and their emotional significance have not only -re inforced the sorting of everyday Americans into divergent parties but also affected their perceptions of reality (Taber and Lodge 2006). Mistaken in- formation about Obama’s birth, religious status, supposed promotion of nonexistent death panels, and supposedly socialist policies are often the only claims that conservatives hear on these topics as they form their views. Similarly, liberals in the health care battles heard again and again that the public option was all that mattered; to this day, many liberals do not realize that the final Patient Protection and Affordable Care Act em- powers states to establish a public option or single-payer system within their border or region as well as create new programs to help ordinary Americans afford access to health insurance coverage and high-quality health care. Although education and attentiveness to public affairs have long had an impact on political and policy knowledge, scholars are now finding that even well-educated, “sophisticated” individuals are particu- larly prone to misperceptions, given the interaction of segmented media consumption with existing beliefs and values. We hear what we want, and see evidence for what we already know to be true. has obama Projected a Powerful Message? Acknowledging these facts about current media institutions and dynam- ics in the United States, many critics have nevertheless questioned the communications strategy of the Obama White House, especially on eco- nomic issues. Why has the president never given major nationally tele- vised speeches on the economy and his overall recovery plan? In the priority area of health care reform, Obama did give major speeches and orchestrate theatrically effective issue forums at key intervals, displaying presidential leadership and offering framings that proved influential be- yond as well as within the Beltway. U.S. policies in Iraq and Afghanistan have also been addressed by the president in nationally visible settings. But Obama has been curiously silent on the nation’s economic crisis. Why, during his initial honeymoon period in the first half of 2009, did Obama not engage in sustained and nationally televised public explana- tions about why the stimulus was structured as it was, how it differed from the Bush Wall Street bailouts, and why government spending can function to create millions of jobs? Although Obama traveled the country from Racine, Wisconsin, to Elkhart County, Indiana, highlighting individ- ual initiatives and progress in selected areas (see Obama 2010), these ef- forts lacked the galvanizing, agenda-setting effect of a major speech or sustained national communications strategy; and their fragmented focus Reaching for a new Deal 31 inherently restricted the White House’s ability to present a coherent eco- nomic plan. Perhaps the president and his advisors believed an overall framing of economic strategy in socially understandable and value-laden terms was too difficult to pull off or was unnecessary—a common mistake of Democratic policy wonks who presume that facts speak for themselves and that sharply pitched communications are inappropriate. If so, Presi- dent Obama and his White House advisors failed to understand that American citizens have heard for many years a steady stream of argu- ments about how government spending hurts the economy and that tax cuts are the only way to spur growth and create jobs (Smith 2007a, 2007b). Against that backdrop of public beliefs and misunderstandings, the presi- dent needed to invest his time and institutional resources in effectively framing his overall economic recovery strategy if he wanted citizens to understand why he proposed what he did—especially if he wanted citi- zens to be able to track successes and shortfalls and remain patient through a protracted recovery process. Even more to the point, as FDR proved back in the 1930s, and as Ronald Reagan demonstrated again when he struggled to preserve presidential power during an economic downturn in the 1980s, citizens in a democracy need and want a sense of strategic presidential leadership in a period of crisis. Whether Larry Summers thought a given measure would pass Ivy League muster, whether Rahm Emanuel thought it would get through Congress, President Obama needed from early 2009 onward to convey to Americans his bold plan for national economic recovery and job creation. Most citizens would probably have accepted setbacks and delays with some patience if they felt certain that the president was leading them to a better place. Obama’s failure to engage in effective public leadership on the economy constitutes, in an important sense, democratic political mal- practice—he botched a central function of the presidency in a period of economic crisis (Dionne 2010). There is, of course, another way to look at the situation. The Obama White House may have underestimated the need for public framing, but more likely the president and his advisors, juggling multiple crises abroad and at home, were focused on getting things through Congress beyond the stimulus itself. Obama originally decided to run for the presidency not to handle a sudden Wall Street–induced meltdown, but to further foun- dational reforms intended to put America’s economy and society on a sounder long-term trajectory (Hirsh 2010). Hence the stress on reforming health care, education, labor relations, and energy and environmental is- sues, with a nod toward the notion of reviving the “grand bargain” on immigration reform that President Bush had tried and failed to move through Congress. 32 Reaching for a new Deal

Obama and senior administration officials seem to have hoped that, with Wall Street stabilized and the stimulus unfolding by the spring and summer of 2010, overall economic growth would send its own message and that facts would make their case. They paid attention to implement- ing the stimulus transparently and efficiently. Surely they knew that job growth would lag—and one suspects they did not want to tell Americans the full truth about that—but they must have hoped that, as months passed, families and communities would see progress on the ground, that they would feel positive effects from unemployment benefits, state aid, construction contracts, and gradually reviving private-sector jobs. Evi- dence suggests that the overall White House political strategy depended on private-sector economic expansion reviving on its own after the initial push from government (Geithner 2010; Hirsh 2010). Thus no persistent and forceful plan for public framing of the White House’s economic and job initiatives was developed to make incomplete success comprehensible to most Americans. White House communications may also have been hobbled by a reluctance to offend the business interests the president’s advisors hoped would revive growth within existing structural parame- ters. Unlike Ronald Reagan, who could keep demonizing government as he attempted to minimize the political costs of the sharp recession head- ing into the 1982 midterm elections, Obama found it hard to voice any full-throttled attack on the bankers and corporate chieftains he and his advisors depended upon to spark the economy as soon as possible. Interestingly, during 2009 and 2010 Obama and his White House also seemed unwilling to call for anything beyond what they thought Con- gress would pass the next month (Bai 2010). This lowered the president’s leadership profile at a time of protracted national economic crisis and caused him to seem mired in small-bore maneuvers, closeted with con- gressional factions. Media structures and dynamics in and of themselves did not force Obama’s White House to be so timid. The president and his advisors seem to have chosen that route. Put simply, when it comes to Americans’ sustained confusion about what is and is not working for the economy or the federal budget, tepid presidential tactics and framing, not just inescapable constraints, bear part of the responsibility.

DeMonizing obaMa Although the Obama White House pulled its punches, opponents of the president and his policies were never silent or restrained, either in Con- gress or in the media. A number of right-wing media commentators, espe- cially Glenn Beck and Rush Limbaugh, have stopped at virtually nothing to demonize Obama, to portray him as alien, possibly foreign-born, as a Reaching for a new Deal 33

“Nazi” or a socialist—in short, as the Other, an enemy to America and Americans.

Racial Stereotypes live on During the 2008 election, Obama’s race and parentage (that his father was a foreign student) receded in importance as the financial crisis exploded, even though independent right-wing groups tried to arouse voter fears based on these characteristics and the Republican ticket of John McCain and Sarah Palin stirred up stories of Obama’s so-called otherness—citing supposed friendships with terrorists and controversial preachers and ac- tivists. In the end, those charges did not prevent Obama from winning. The election of the nation’s first African American president by a large majority of voters seemed to confirm that racial stereotyping had lost out in the face of deeper worries about the economy and a broad disenchant- ment with GOP leadership. But any hope that racial and nativist fears were permanently overcome was dashed after Obama assumed the presidency, because millions of Americans found him hard to accept and have remained open to manipu- lators of hoary stereotypes. Popular anxieties might have remained largely subterranean had not ultra-right agitators and media entrepreneurs been so willing to stir the pot—even as conservative Republicans competed to see who could go the furthest in attacking President Obama. The 2010 political primary season encouraged a rhetorical sprint toward the out- rageous right; and the lead-in to the 2012 Republican presidential prima- ries will keep the pot boiling. There is no established heir apparent as the leading GOP presidential candidate, and the freelancing contenders in- clude willing wielders of racial innuendo such as Sarah Palin and Newt Gingrich. All GOP contenders are trying to appeal to the same heavily white and disproportionately southern base voters, not to mention striv- ing to attract hard-to-predict Tea Partiers, some of whom show open con- tempt for Obama in ways that often include racist images and over-the- top rhetoric laced with racial innuendo. attempts to Revive the conservative economic narrative Popular racial anxieties stoked by race-baiting leaders are not the only sources of intense opposition to President Obama, his agenda, and his allies. Many wealthy conservatives and powerful stakeholders angry at higher taxes and tighter regulations are also in the field. Ultimately, many of the very same Wall Street and other business interests saved by Obama’s 34 Reaching for a new Deal emergency economic programs have turned against him too. The Supreme Court’s decision in the Citizens United case has taken all fetters off wealthy interests who want to intervene in election contests by giving big money to tarnish Democratic candidates and further demonize Obama as sup- posedly responsible for big government spending. “Obama’s bailouts” are alleged to be “killing jobs” and delaying economic recovery. During the debates over expiring Bush-era tax cuts for the very rich, the U.S. right wing resumed its long-standing public campaigns to convince Americans that huge tax breaks for the super wealthy are the most effective way to create more jobs, even as the same conservatives claim that they want to substantially reduce the budget deficit. Polls tell us that substantial majorities of Americans oppose tax cuts for the rich, but Democrats did not act to stop such cuts when they could in 2009 and 2010, and did not give citizens a framework in which to under- stand how huge tax cuts for the very rich increase the deficit but create few jobs and do little for the national economy. Over the course of 2009 and 2010, President Obama’s failure to envelop his economic recovery efforts in a persuasive master narrative ceded the public debate, in effect, to long-time conservative nostrums about big government as the enemy of economic growth. That contrasts sharply with other twentieth-century change-oriented presidents, from FDR to Reagan, who constantly offered narratives, vivid metaphors, and value-oriented framings to help the pub- lic understand why the other side was to blame for crises, and why they were pushing good solutions—even if it would take a long time for the solutions to work, and even if Congress would not immediately fall into line. cReaTing new feDeRal PRogRaMS veRSUS ReShaPing eSTabliSheD PolicieS Finally, we come to the biggest difference between the 1930s and now— and the one that matters most as we move toward analyzing the efforts to achieve policy shifts in realms such as health care, higher education, and energy and the environment. In the 1930s, the New Dealers in Congress and in the FDR administration were advocating new kinds of federal government interventions—new financial regulations, unprecedented na- tional policies like minimum wage and maximum hour rules, Social Secu- rity, unemployment insurance, and new rights for labor unions to organize. Previously, apart from setting tariffs and seeding infrastructure and west- ern expansion, the U.S. federal government had intervened actively in economic and social affairs only temporarily during major wars. The New Dealers, amidst a massive Great Depression, were advocating a series of Reaching for a new Deal 35 innovative permanent peacetime interventions. They were selling new ideas in a huge economic emergency—and, ultimately, World War II re- inforced and helped entrench much of what had begun during the De- pression. Today, by contrast, Obama and his Democratic allies offer revised frameworks for already pervasive federal regulations, benefits, and taxes— but not first-time interventions. As we have seen, they started these efforts just as a big economic downturn was gathering steam, not at its nadir; and in contrast to the impacts of World II on New Deal initiatives, the wars Obama inherited in Afghanistan and Iraq drained rather than reinforced economic resources and presidential attention from domestic reforms. Obama arrived in office following a half-century of previous accretions of pervasive regulatory and fiscal interventions—and set out to reverse some of those and redirect others. The new president and his allies came to office dogged by federal deficits already run up to high levels: finding new resources for redistributive social benefits—such as more generous college loans for low-income families, or subsidies to help poor and lower- middle-income people afford health insurance—required that they raise new revenues or recapture revenues previously devoted to other federal programs. Pundits declare nearly every day that Americans in the early twenty- first century are fighting about government versus the market. This is nonsense. Over the past six decades, Democrats and Republicans alike in Washington have presided over more or less steady increases in taxes and tax subsidies, regulatory interventions, and social spending, not to men- tion rising deficits. Both parties have participated in building up a mas- sive, ramified, expensive, and pervasive subsidy and regulatory state (Pierson 2007). This steady accretion of government activism precipitated the conservative backlash against President George W. Bush as an “im- postor,” as one book title put it (Bartlett 2006). On the margin, Democrats tilt the tax advantages and subsidies toward working families and the middle class, and Republicans since 1980 have pushed subsidies and ad- vantages toward favored industries and very wealthy taxpayers (Jacobs and Skocpol 2005; Bartels 2008; Hacker and Pierson 2010). Neither party has cut back in any important respect. Consequently, every region of the United States, and every industry and social stratum, has a stake in exist- ing federal interventions into the economy and the society. In our day and age, therefore, when a change-oriented president like Obama arrives in Washington aiming to transform the forms and redis- tributive impact of federal government interventions, he is not starting from scratch like FDR was. He is redirecting resources—and at the same time necessarily asking some citizens and interests already enjoying regu- 36 Reaching for a new Deal latory advantages, governmental subsidies or benefits, and tax breaks to accept less. Social science tells us that those asked to give up something are quite alert to their potential disadvantage and quick to mobilize against change, whereas those who might benefit from rearrangements in some hypothetical future are likely to be skeptical, and certainly not yet concretely accustomed to the new advantages they could enjoy. Potential beneficiaries therefore remain mostly disengaged. The disparity of mobi- lization only becomes worse when the previously advantaged are wealth- ier or better organized, and the potential beneficiaries are lower- or lower- middle-income Americans who may not even vote regularly, and have not been previously mobilized by groups advocating their interests, such as AARP, which stepped in to mobilize seniors after Social Security and Medicare became important (see Campbell 2003). Add to this imbalance the demonstrated finding that officeholders pay more heed to the prefer- ences of the rich than to those of the middle class or the poor, and the di- lemma of how to leverage equality-enhancing changes in public policy becomes all the more acute (Bartels 2008; Gilens 2005; Jacobs and Page 2005; Hacker and Pierson 2010). The Obama administration’s attempts to deal with imbalances in political capacity by bargaining with and dividing powerful stakeholders have outraged liberal supporters, as happened with the White House decision to cut deals with powerful lobbies during the health care reform battles, to forestall united opposition (Jacobs and Skocpol 2010, chap. 2). Overall, the knotty dilemma of how to shift policies in redistributive directions in ways that cut against current political inequalities has be- deviled the Obama project from the beginning. Health insurance coverage for lower- and middle-income insured Americans could be financed only through hard-fought steps to place new charges on businesses and the well-to-do. Enhanced Pell Grants for lower-income college students and better loan terms for middle-class students required a battle with private bankers accustomed to receiving guaranteed profits for administering federally backed loans without risk. Proposals for new energy policies aroused resistance from the coal and oil and gas industries, some of which were located in regions represented by congressional Democrats— illustrating but one source of Obama’s difficulty in assembling durable legislative coalitions. What is more, as we see in ongoing tax and budge battles fought at fever pitch, Obama’s 2008 campaign promise to allow the expiration of George W. Bush’s tax breaks for the very highest income earners faced fierce pushback and was undermined by Democratic skittishness, even when the president’s party enjoyed congressional majorities in 2009 and 2010. After Republicans took over the House in the 112th Congress, they Reaching for a new Deal 37 put in place rules that favor additional tax cuts and are pledged to slash public spending on programs that benefit ordinary Americans. This sets up confrontations through 2012 between congressional Republicans and President Obama, who must begin to sustain and raise revenues to re- duce looming long-term deficits and support existing and newly prom- ised benefits for the majority of Americans. As we document in every policy area considered in this collection, at this point in U.S. history, any second New Deal involving redirection of federal interventions in an equality-enhancing direction is a much more fraught undertaking than the original New Deal—not least because there are no slack federal reve- nues available. Taxes and the budget will be at the center of domestic po- litical conflicts for months and years to come. Fighting for a second New Deal in the current U.S. policy and political landscape is also bound to be a more confusing and opaque undertaking, because accretions of previous federal spending, regulations, and tax breaks crowd every major policy area—and large bureaucracies, multiple congressional committees, and hundreds of interest groups have a hand in ongoing policymaking in every realm. In the 1930s, American citizens could see that big, new things were being proposed and debated in Wash- ington. Social Security at its inception was hard to miss: it enjoyed support from two-thirds or more beginning in the mid-1930s. As it was imple- mented and expanded from the 1930s to the 1970s, its supporters could offer simple metaphors to try to make it popularly understandable. In contrast, America’s contemporary public policies include many com- plex regulations and publicly invisible tax credits and tax breaks (Mettler 2007; Soss, Hacker, and Mettler 2007). Furthermore, as exemplified by the Patient Protection and Affordable Care Act of 2010, major reforms affect- ing already mind-bogglingly complex sets of institutional arrangements necessarily turn into massive compilations of regulatory, tax, and spend- ing provisions running to thousands of pages. Such complex measures are difficult for Congress people to master, and virtually impossible to explain to citizens who know that something big is being endlessly and bitterly argued about—but what is it, and how can it be good, or workable? In the case of Affordable Care, citizens remain divided and puzzled long after the reform passes into law. In short, already huge, pervasive, and complex government undertak- ings are a challenge to rework—and the politics involved makes it even more challenging for citizen majorities to appreciate what is going on. Obama’s agendas for policy change progressed quite remarkably during 2009 and 2010—in health care reform, education loans, financial regula- tion, and many other realms of law and regulation. But much of what happened was either invisible or ominously incomprehensible to most 38 Reaching for a new Deal citizens. This agenda remains big, worrisome, and easily caricatured— especially at a time of economic stress when Americans know one thing for a certainty: the national economy is not getting stronger fast enough to ensure that a rising tide will lift all boats.

The end of change? Our project is called Reaching for a New Deal with a deliberate embrace of ambiguity. The word reach suggests, at times, arrival at a desired desti- nation, yet likewise connotes an aspiration to get someplace at the edge of likely attainment, such as when college applicants apply to reach schools. What happens when a desired goal is reached, but at high political cost? What happens when the effort to get somewhere falls short? And what about the possibility of misdirected reach? Have Obama and his allies pushed in the right directions; and what are the consequences of falling short, or arriving at interim destinations only to face backlash or incom- prehension or repudiation?

The new Political Reality Democrats suffered massive losses in November 2010, losing control of the House of Representatives, losing seats in the Senate, and losing control of many governorships and statehouses. Not only that, but the Republican Party has moved further to the right than at any time in decades. The GOP “pledge” issued as a 2010 election manifesto called openly for huge tax cuts for the rich accompanied by rollbacks of all of President Obama’s achievements so far (Republican Party 2010). In all likelihood, there will be vociferous blocs in both the 112th House and Senate who call not just for an end to all current federal initiatives to promote economic renewal and social equity, but also for the rollback of long-established New Deal and Great Society programs and the undoing of the Affordable Care Act, the landmark achieved during Obama’s first two years. Seemingly re- warded by electoral victories in 2010, sheer obstruction and delay as a Republican strategy worked in the political short term—and extremist forces within the GOP will continue to cow others who want to take any other course. That some Obama priorities succeeded in the lame-duck congressional session at the very end of 2010 does not gainsay that, on the big issues of taxes and budgets, the GOP started to get its way even in the waning days of the Democrat-controlled 111th Congress. During 2011 and 2012, the GOP will demand ever more concessions, and will balk at any action whenever they do not get all or virtually all of what they want. Deadlock and shouting will likely reach new crescendos in the 112th Con- Reaching for a new Deal 39 gress even if, occasionally, bipartisan deals are finally struck to avoid im- mobility on vital issues. The immediate prospects for congressional Republicans to work with Obama and Democrats to solve major national problems are poor, above all because GOP incumbents face continuing scrutiny from Tea Party ac- tivists who hate Obama and might mount primary challenges should signs of cooperation appear. Some pundits blame Obama for such polar- ization and deadlock, but the logic is puzzling, given the severity of the problems the president has had to tackle and his repeated efforts to find compromises. The recent intense polarization is the by-product, not just of Obama’s change-oriented agenda, but also of the strategic choices of Obama’s opponents and the media dynamics and institutional advan- tages for obstruction we have discussed—interacting with the profound social demoralization caused by a deep and prolonged economic down- turn. Economic troubles, especially long-term unemployment, remain the true elephant in the room. Financially induced crises lead to slow recov- ery, and all the more so when, as in the concurrent housing downturn, families and individuals as well as businesses lose equity. Many analysts also argue that increasing inequalities in the United States have undercut the capacity of the middle strata to consume what the economy can pro- duce—hence reinforcing business caution about investments (Rajan 2010; Reich 2010; Story 2010). If so, the country needs more, not fewer, efforts to bolster middle-class families in consumer and labor markets. Arguments that Obama has not tried to do enough, or has been unable to do enough, have just as much justification as claims that he has overreached toward the left and thus provoked conservative anger (Hirsh 2010). No one can predict the future, and the frenzies of punditry that fol- lowed the 2008 and 2010 elections were overwrought. All we can do here is suggest possibilities. The most clear-cut is that the time of big presiden- tial legislative initiatives ended with the 2010 elections. Even with large Democratic majorities during 2009 and 2010, Congress could only process some of Obama’s agenda items, as we have discussed, and the enacting coalitions added up to bare majorities. Republican gains in 2010 cut off legislative possibilities except in the rare instances where bipartisan deals can be put together. In pending unresolved areas such as energy and im- migration, this is likely to mean that piecemeal steps, at most, will occur and those steps may be restricted to administrative actions by Obama’s departments and agencies. Until the presidential election of 2012 brings a kind of public judgment on GOP obstruction and Obama’s performance, there will be more sound and fury in American politics than genuine pol- icy movement. 40 Reaching for a new Deal will obama’s early legislative accomplishments be Rolled back? More interesting is the question of whether massive Democratic losses in November 2010 will open the door to repealing the major legislative ac- complishments of the 111th Congress: health care reform, financial reform, and higher education reform. Republicans are loudly proclaiming their will to repeal health care reform, above all, and House Speaker John Boehner was locked by his own election-time rhetoric into introducing a repeal bill immediately after taking office (Hooper 2010; Republican Party 2010). Obama must spend 2011 and 2012 defending his landmark legisla- tive accomplishments and tending to their administrative implementation in a highly contentious environment. Republican congressional commit- tees are harassing his executive appointees and lugging them into hearing after hearing, looking for scandals and hot-button issues to dramatize. Re- publican budget-makers seek to de-fund administrative agencies involved in implementing health, education, and financial reforms, forcing huge budget crises (and risking government defaults and shut-downs, which may not be popular). The president is not powerless, though. He can veto outright repeal bills, even if they can make it through the Senate, and his cabinet officers are finding ways to move forward with implementation amidst hearings and budgetary roadblocks. Chances are that the Obama administration will succeed in moving for- ward. In the key areas where breakthrough legislation occurred during 2009 and 2010, as well as in areas where action has been primarily by administrative means all along, change in federal regulations and subsi- dies will proceed through 2012 at least. Obama will keep pushing for re- directions of federal efforts through administrative action—and as the communicator-in-chief, will be freed from the need and temptation to closet himself with congressional leaders. Quite possibly, he will regain his voice as a national political leader. And in key areas, such as health care reform, he can already highlight the concrete benefits of his achieve- ments, including the landmark Affordable Care law that Republicans are trying to undo, such as regulations protecting health insurance customers, tax credits for small businesses, new benefits for Medicare recipients, and fiscal controls on Medicare spending. Quite likely, financial reform will survive, with the new Consumer Financial Products Agency launched un- der the leadership of Elizabeth Warren working directly for the president. The Affordable Care framework will almost certainly survive, too (Jacobs and Skocpol 2010, chap. 5; Skocpol 2010). The overall thrust of comprehensive health care reform will move for- ward even if Congress manages to modify many specific regulations and Reaching for a new Deal 41 benefits at the behest of businesses and high-end taxpayers—possibly to the detriment of subsidies promised after 2014 to help less-privileged Amer icans afford insurance. The same kind of quiet evisceration of equality-enhancing measures may occur in a range of policy areas—in congressional committee chambers as well as in regulatory agencies that need to carry out complicated agendas under pressure from lobbyists and hostile legislators. One reason to expect some backtracking from legislative reforms achieved on paper during 2009 and 2010 is that virtually everything that has passed requires capable, tough, and persistent administrative imple- mentation through a maze of federal agencies, in the case of financial re- form, and through state as well as federal agencies, in the case of health care reform. Contentious politics will not only undercut administrative consistency. Contention may also embolden powerful interest groups to maneuver behind the scenes to undercut effective administration of policy changes they do not like. This is where much of the real action will be in coming months, far from the spotlight of shouting partisan politicians and media pundits. Does the U. S. federal government have the administrative capacity to carry through complicated reforms? We will see.

The Political Prospect Moving beyond what may happen to legislation or rule shifts that Obama and his congressional supporters pushed onto the books in 2009 and 2010, we must ponder what happens to the United States if the immediate po- litical future brings gridlock and enhanced leverage for highly ideological, antigovernment politicians. Whatever one may think of the reforms the Obama administration has pursued, the president has asked Congress and the country to grapple with truly pressing challenges—of economic renewal, environmental degradation, declining educational performance and uneven access to postsecondary institutions, a broken immigration system, and a costly and inefficient health care system, as well as other festering dilemmas. All these are very real problems not likely to go away. Many are epochal challenges that affect the nation’s international com- petitiveness as well as its ability to expand the economy and marshal all available human talents. What does it mean if the U.S. federal government is further weakened in its capacity to deal with major issues, both politi- cally and administratively? This question becomes all the more pointed when growing federal def- icits are brought into the picture—in a polity where powerful partisan and movement forces prefer rhetorically vapid proposals to genuine steps to address the most expensive items in the government’s portfolio of existing 42 Reaching for a new Deal commitments. Republicans on Capitol Hill and their allies rigidly oppose tax increases even if they are part of a grand bargain that might include trims of entitlements as well as reforms of the tax code. The unresolved challenges covered in the third part of this volume—immigration, energy and climate change, and revenue—cannot be wished away. Furthermore, the political forces now at work are contradictory and toxic, especially in the midst of an economic and employment slowdown that neither the Obama administration nor congressional Republicans are likely to be able to pull the country out of very quickly. The looming political dangers for both major parties are obvious: Dem- ocrats may continue to be undercut by slow economic recovery and may lose the presidency and the Senate in 2012, punished by voters who are frustrated that Obama and congressional Democrats seem to have focused on debating big, future-oriented reforms as the economy continues to lag. But how will Republicans fare with the same public if Republican gover- nors increase unemployment in their states by slashing public infrastruc- ture projects and throwing teachers, police, and firefighters out of work? Of if House Republicans endlessly relitigate health care reform and push investigations and government shutdowns—following the same script that did not work so well for the GOP after 1994? Public disgust with both major parties seems likely to persist, even deepen. Before long, some analysts speculate, the doors will open to inde- pendent or third-party candidacies. But the institutional obstacles in America’s federated electoral system are great, likely to prevent sustained third-party capacity from emerging on a national scale. Lone-wolf inde- pendents, like Ross Perot in 1992 and 1996, are more likely, but most serve as little more than electoral spoilers and, should an independent actually win major office, would find it hard to make government work. Pounding the desk and shouting will not be enough. More likely than the rise of a viable third party, or the sudden appearance of effective independent ex- ecutives, will be a continual roiling, as voters throw first one and then another party incumbent out of office. This, too, might lead to a degrada- tion of public capacities, not to mention deepening voter disillusionment. Looking back at the first New Deal, it is telling that Franklin Delano Roosevelt got many of his early proposals enacted with lightning speed and considerable bipartisan support during 1933 and 1934—but his first efforts did not prove durable or economically adequate. The Supreme Court invalidated much of his initial National Recovery Act, and the econ- omy struggled to revive, and eventually went into another tailspin after Roo sevelt, in his second term, cut back federal spending under conser- vative pressure. Many of the enduring legislative reforms of the New Deal—the ones that laid the basis for postwar prosperity in a middle-class Reaching for a new Deal 43

society—came from progressive movements and congressional liberals pressing forward somewhat independently from FDR, or took force dur- ing World War II. History will not simply repeat itself; the phases and dynamics of the Obama reformist presidency have been and will remain different, above all because of the interplay of different political and institutional dynam- ics with a deep economic crisis whose arrival coincided with the start of the Obama presidency. But the past should remind us that the entire un- folding of politics in a period of crisis does not happen at once, and sur- prising turns are possible. Obama has time through 2012, certainly, and perhaps for four more years after that, to cement and propel his renova- tions of U.S. policies. He will succeed or fail at mastering international challenges that will affect his popularity and governing capacity at home in ways still to be determined. Even in domestic politics, despite all of the decay in his popularity, Obama’s standing with the U.S. public remains as strong as that of previous U.S. presidents dealing with economic troubles, including Reagan, and his standing in his own party, among declared Democratic identifiers, is much stronger than Bill Clinton’s was in the middle of his first term (Klein 2010). Congressional chambers may well change direction more than once in what remains of Obama’s presidency, and Democrats and associated grassroots movements may find new voices as they take up the role of criticizing House Republicans and GOP governors, who will face even deeper budget woes as federal stimulus funds from 2009 and 2010 dry up. The euphoria that accompanied Barack Obama’s election and inaugu- ration is long gone, as is the sense that most Americans had in early 2009 that Obama knew how to save the national economy quickly. Nothing can gainsay the fact that Obama’s White House has fallen short of facing the full challenge of leading the nation to a confident economic recovery— and presidents are measured not just against each other in some timeless statistical space, but against the depth of national challenges they are called to address as well (Judis 2010a, 2010b). Much depends in the im- mediate future on whether the currently struggling economic recovery continues, and whether Obama and his administration project more com- pelling narratives and effective renewal plans for the future. Jobs are what Americans care about, and right now neither party seems to be offering ideas that experts believe will boost employment to meet the supply of job seekers. Reforms in revenues, health care, energy policy, education, labor relations, and immigration are all inextricably tied up with economic pol- icy and national economic trends, and with what the president is able to convince Americans the economy needs. U.S. political and governing ca- pacity may also hinge on economic effectiveness, because the federal gov- 44 Reaching for a new Deal ernment could devolve into permanent shouting and deadlock if people remain angry and distrustful. As hard as Obama’s first two years turned out to be, his future cap- taincy is likely to be much more difficult. The only thing certain is that U.S. politics is navigating very rough waters. Whether the U.S. ship of state will founder, or come through it, remains to be seen. And if the ship comes through the storm, will it have all Americans still on board, or just the comfortable and the well-connected? That, too, remains to be seen. looking aheaD: The Plan of The collecTion The chapters to come in this book build on the critical overview of Obama’s presidency we have offered in this chapter. Leading scholars have delved in detail into what was attempted and achieved or stymied—and with what political effects. Investigations of eight major areas of U.S. domestic policy are grouped into three major sections. In the first part, contributors focus on landmark pieces of reform legis- lation fashioned and enacted during 2009 and 2010. The first three chap- ters probe, in turn, the hard-fought enactment of comprehensive health care reform through legislative bargains and interest group struggles that took up much of the oxygen in the first year of Obama’s presidency; the achievement of a sharp change of direction in federal higher education policy, reducing the role of bankers and enhancing funding for low- and middle-income students; and the enactment of a new framework for fed- eral regulation of the powerful financial services sectors in the U.S. econ- omy. Action in all three of these areas occurred through the legislative process with backing from Democratic majority coalitions in Congress and very little Republican support or acquiescence. In part two, the focus shifts to policy realms where the federal govern- ment has less direct leverage because comprehensive labor law reform remains obstructed in Congress by many Democratic as well as Republi- can senators, and because states and localities matter more in primary and secondary education even though the federal role has increased in recent times. In distinct ways, Obama cabinet officials and administrative agen- cies have taken the lead, using regulations to help workers and unions, and using modest funding and an administratively orchestrated “race to the top” competition to spur ongoing educational reforms in the states even as existing teaching positions were maintained through stop-gap federal funding. Finally, part three looks at festering national challenges—immigration regulation, energy and climate change, and taxes—where Obama has Reaching for a new Deal 45 called for large-scale bargains backed by bipartisan congressional coali- tions, but to little positive effect. The battles over health care reform took longer to reach resolution than the White House originally anticipated, tightening the window for any other major efforts. Even more to the point, fault lines by region or ideology left Democrats in Congress struggling to muster majorities for other major reforms beyond health care and finan- cial regulation, and Republicans were unwilling to sign on to compro- mises. Yet the challenges about immigration, energy and climate change, and taxes are inescapable, setting the stage for future battles as Republi- cans gain ground. Each analyst not only explains the stalemates that have taken shape so far, but also probes where things might go next.

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